The set-up: Cidara Therapeutics (CDTX) develops antibiotic drugs with a focus on treatment of serious fungal infections. It’s due to release results on a Phase 2 trial of echinocandin (CD101) in candidemia, with results expected in the fourth quarter. The stock value was cut in half in February, dropping from $11.70 to below $6, after disappointing Phase 2 trial data on a topical version of the same drug.

Why I like it: I like the company, the management team and the catalyst. I like the chances of them having positive data in Q4. This formulation is being delivered intravenously, and IV delivery of antibiotics usually is much more effective, and safer as well. I like that they’re an antibiotic company, because those tend to be a bit less risky. I also like the management team; Jeffrey Stein, Cidara’s CEO, used to run a company called Trius Therapeutics, which developed an antibiotic called tedizolid, got it through Phase 3 trials and was acquired by Cubist Pharmaceuticals, Inc. in 2013 for a nice premium.

How I’m playing it: I’ve added CDTX to my watch list, looking to buy it on dips. I think it’s a good buy between $6 and $6.50, with the potential to have a nice catalyst run up to $8; if they report positive data – though I typically sell stocks before the catalyst event occurs — CDTX could go back up to $10 a share, and maybe all the way up to $12.

Listen to Kyle Dennis discuss Cidara in the Raging Bull podcast

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Kyle Dennis runs Kyle Dennis’ Biotech Breakouts (biotechbreakouts.com). He is an event-based trader, who prefers low-priced and small-cap biotech stocks.  He currently has no shares, options or open orders in CDTX; he last owned the stock on April 26, when he played it as a day trade.

Author: Kyle Dennis

Straight outta college Kyle Dennis taught himself to trade, and then made over $7 million in trading profits by the time he was 28 years old. Kyle reveals how to find, track, and profit from lucrative trades for exceptional profits. Thousands of traders follow him every day to learn how to target these high probability trades.

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